Business confidence in Scotland fell 22 points during March to -7%, according to the latest Business Barometer from Bank of Scotland Commercial Banking.
The research, taken between the March 2 - 16, showed that companies in the region had lower confidence in their business prospects at -4%. When taken alongside their views of the economy overall, this gives an overall confidence of -7%.
Across the UK, overall business confidence fell by 17 percentage points to 6% in March, the lowest level since October 2019. However, the report showed that nationally, for the second week of the survey, a much sharper fall in overall confidence was recorded at -3%. It matches the lowest dip seen by the barometer since December 2011 and is otherwise the lowest dip since March 2009 during the global financial crisis.
Responding specifically to the impact of the Coronavirus, 66% of Scotland businesses stated that they had already been affected or expected to be impacted, ahead of Boris Johnson’s initial call for the public to stay at home on March 16th. The data illustrates the impact that the outbreak was having on business confidence before many initiatives launched by the Government to help combat the virus were announced.
The Business Barometer questions 1,200 businesses monthly and provides early signals about UK economic trends both regionally and nationwide.
Fraser Sime, regional director for Scotland at Bank of Scotland, said: “It’s impossible to accurately predict how COVID-19 will impact the Scottish economy, so it’s not surprising to see the confidence of Scottish businesses taking a dip as the pandemic evolves.
“The First Minister has called for a partnership to get through this period where the public sector, trade unions, businesses and third sector organisations work together to support Scotland’s workforce. We’re also working by the side of businesses and the government to help firms adapt and adjust as we navigate through this unprecedented period.
“At Bank of Scotland, we’ve committed to lend up to £18bn to businesses this year and have set aside £2bn of arrangement fee free finance to help those directly impacted by COVID-19. From tourism and hospitality to manufacturing, this support is available now. And we will continue to guide and help businesses across all sectors through any interruptions they may face.”
Businesses in the North-east had the highest confidence at 23%, ahead of the South-west at 16%, and London at 12%.
Those in the South-east were the least confident, with an overall confidence of -10%, 16 points below the national average.
In March, overall business confidence fell across all four sectors surveyed. Confidence in the retail sector saw the sharpest decline, falling 21 percentage points to 9%. The manufacturing sector also saw a big decline from 31% to 11%, services was down 18 points to 1%, while the construction sector fell by 15 points to 14%.
Paul Gordon, managing director for SME and mid corporates, Lloyds Bank Commercial Banking, said: “There is now little doubt that businesses across the board are feeling the impact of COVID-19. Many businesses have already had to pause their work and others are trying to adapt to new ways of working. While all sectors have displayed a real dip in confidence, it is important that businesses take the support that is available to them to help them through this unprecedented and uncertain time. We remain committed to supporting our customers in the weeks and months ahead in any way we can.”
Hann-Ju Ho, senior economist, Lloyds Bank Commercial Banking, said: “The results in March demonstrate the impact of the shutdown of large swathes of the economy to combat the pandemic even in advance of the Government’s stringent measures announced in recent days. Sentiment has returned to historic low levels after improving in recent months. We will continue to monitor what businesses are telling us, and hope that they can take steps to minimise the impact of current economic downturn.”